How Exactly Will the New NAFTA's Sunset Clause Work?

The final version of the sunset clause in the new NAFTA (USMCA) reads as follows:

Article 34.7: Review and Term Extension

1. This Agreement shall terminate 16 years after the date of its entry into force, unless each Party confirms it wishes to continue this Agreement for a new 16-year term, in accordance with the procedures set forth in paragraphs 2 through 6.

2. On the sixth anniversary of the entry into force of this Agreement, the Commission shall meet to conduct a “joint review” of the operation of this Agreement, review any recommendations for action submitted by a Party, and decide on any appropriate actions. Each Party may provide recommendations for the Commission to take action at least one month before the Commission’s joint review meeting takes place.

3. As part of the Commission’s joint review, each Party shall confirm, in writing, through its head of government, if it wishes to extend the term of this Agreement for another 16-year period. If each Party confirms its desire to extend this Agreement, the term of this Agreement shall be automatically extended for another 16 years and the Commission shall conduct a joint review and consider extension of this Agreement term no later than at the end of the next six-yearperiod.

4. If, as part of a six-year review, a Party does not confirm its wish to extend the term of this Agreement for another 16-year period, the Commission shall meet to conduct a joint review every year for the remainder of the term of this Agreement. If one or more Parties did not confirm their desire to extend this Agreement for another 16-year term at the conclusion of a given joint review, at any time between the conclusion of that review and expiry of this Agreement, the Parties may automatically extend the term of this Agreement for another 16 years by confirming in writing, through their respective head of government, their wish to extend this Agreement for another 16-year period.

5. At any point when the Parties decide to extend the term of this Agreement for another 16-year period, the Commission shall conduct joint reviews every six years thereafter, and the Parties shall have the ability to extend this Agreement after each joint review pursuant to the procedures set forth in paragraphs 3 and 4.

6. At any point in which the Parties do not all confirm their wish to extend the term of this Agreement, paragraph 4 shall apply.

I'm a little puzzled by how this is supposed to work. Let's assume that the new NAFTA is implemented into U.S. domestic law in 2019. It would then terminate in 2035 unless the initial 16 year term is extended. The first joint review would take place in 2025.

Here's where it gets tricky. I think I read the provisions to say that if the term is extended through the joint review held in 2025, there will be a new 16 year term added on that runs from 2035 to 2051.

But then it seems like the parties are supposed to do subsequent joint reviews every six years. Would the subsequent reviews keep tacking on 16 year periods after 2051? So a review in 2031 (i.e., 6 years after 2025) would add a period from 2051 to 2067? And a review in 2037 would add a period from 2067 to 2083?

Now let's say that in the 2043 review, the parties do not agree to extend. The 2083 end date would still be in place, right? So then every year from 2043 to 2083 the parties would meet to do a joint review and reconsider extending? Or would this annual meeting just be required through the end of the current term, and things start fresh in the next term?

Does anyone else have a different reading or other thoughts on how this is supposed to work?

Comments

How Exactly Will the New NAFTA's Sunset Clause Work?

The final version of the sunset clause in the new NAFTA (USMCA) reads as follows:

Article 34.7: Review and Term Extension

1. This Agreement shall terminate 16 years after the date of its entry into force, unless each Party confirms it wishes to continue this Agreement for a new 16-year term, in accordance with the procedures set forth in paragraphs 2 through 6.

2. On the sixth anniversary of the entry into force of this Agreement, the Commission shall meet to conduct a “joint review” of the operation of this Agreement, review any recommendations for action submitted by a Party, and decide on any appropriate actions. Each Party may provide recommendations for the Commission to take action at least one month before the Commission’s joint review meeting takes place.

3. As part of the Commission’s joint review, each Party shall confirm, in writing, through its head of government, if it wishes to extend the term of this Agreement for another 16-year period. If each Party confirms its desire to extend this Agreement, the term of this Agreement shall be automatically extended for another 16 years and the Commission shall conduct a joint review and consider extension of this Agreement term no later than at the end of the next six-yearperiod.

4. If, as part of a six-year review, a Party does not confirm its wish to extend the term of this Agreement for another 16-year period, the Commission shall meet to conduct a joint review every year for the remainder of the term of this Agreement. If one or more Parties did not confirm their desire to extend this Agreement for another 16-year term at the conclusion of a given joint review, at any time between the conclusion of that review and expiry of this Agreement, the Parties may automatically extend the term of this Agreement for another 16 years by confirming in writing, through their respective head of government, their wish to extend this Agreement for another 16-year period.

5. At any point when the Parties decide to extend the term of this Agreement for another 16-year period, the Commission shall conduct joint reviews every six years thereafter, and the Parties shall have the ability to extend this Agreement after each joint review pursuant to the procedures set forth in paragraphs 3 and 4.

6. At any point in which the Parties do not all confirm their wish to extend the term of this Agreement, paragraph 4 shall apply.

I'm a little puzzled by how this is supposed to work. Let's assume that the new NAFTA is implemented into U.S. domestic law in 2019. It would then terminate in 2035 unless the initial 16 year term is extended. The first joint review would take place in 2025.

Here's where it gets tricky. I think I read the provisions to say that if the term is extended through the joint review held in 2025, there will be a new 16 year term added on that runs from 2035 to 2051.

But then it seems like the parties are supposed to do subsequent joint reviews every six years. Would the subsequent reviews keep tacking on 16 year periods after 2051? So a review in 2031 (i.e., 6 years after 2025) would add a period from 2051 to 2067? And a review in 2037 would add a period from 2067 to 2083?

Now let's say that in the 2043 review, the parties do not agree to extend. The 2083 end date would still be in place, right? So then every year from 2043 to 2083 the parties would meet to do a joint review and reconsider extending? Or would this annual meeting just be required through the end of the current term, and things start fresh in the next term?

Does anyone else have a different reading or other thoughts on how this is supposed to work?